The Pediatric Department at Wymont General Hospital has a capacity of 90 beds an
ID: 2576974 • Letter: T
Question
The Pediatric Department at Wymont General Hospital has a capacity of 90 beds and operates 24hours a day every day. The measure of activity in the department is patient-days, where one patient-day represents one patient occupying a bed for one day. The average revenue per patientday is $400 and the average variable cost per patient-day is $240. The fixed cost of the department (not including personnel costs) is $1,000,000. The only personnel directly employed by the Pediatric Department are aides, nurses, and supervising nurses. The hospital has minimum staffing requirements for the department based on total annual patient-days in Pediatrics. Hospital requirements, beginning at the minimum expected level of activity, follow:
These staffing levels represent full-time equivalents, and it should be assumed that the Pediatric Department always employs only the minimum number of required full-time equivalent personnel. Average annual salaries for each class of employee are: aides, $45,000; nurses, $60,000; and supervising nurses, $84,000. Required: 1. Compute the total fixed costs (including the salaries of aides, nurses, and supervising nurses) in the Pediatric Department for each level of activity shown above (i.e., total fixed costs at the10,000–14,000 patient-day level of activity, total fixed costs at the 14,001–17,000 patient-day level of activity, etc.). 2. Compute the minimum number of patient-days required for the Pediatric Department to breakeven. (Hint: Divided total fixed costs in each level by unit contribution margin to see if the required B.E unit sales is in that patient-days range)
Annual Patient -Days Aides Nurses Supervising Nurses 10000 - 14000 21 11 4 14001 - 17000 22 12 4 17001 - 23725 22 13 4 23726 - 25550 25 14 5 25551 - 27375 26 14 5 27376 - 29200 29 16 6Explanation / Answer
Annual Patient Day Aides Per Aide Cost Total Aides Cost Nurses Per Nurse Cost Total Nurses Cost Supervising Nurses Per Surpervisor Cost Total Supervising Nurses Cost Total Staffing Cost Other Fixe Cost Total Fixed Costs Contribution per patient day Breakeven Patient Days 10000 - 14000 21 45,000 9,45,000 11 60,000 6,60,000 4 84,000 3,36,000 19,41,000 10,00,000 29,41,000 160 18,381.25 14001 - 17000 22 45,000 9,90,000 12 60,000 7,20,000 4 84,000 3,36,000 20,46,000 10,00,000 30,46,000 160 19,037.50 17001 - 23725 22 45,000 9,90,000 13 60,000 7,80,000 4 84,000 3,36,000 21,06,000 10,00,000 31,06,000 160 19,412.50 23726 - 25550 25 45,000 11,25,000 14 60,000 8,40,000 5 84,000 4,20,000 23,85,000 10,00,000 33,85,000 160 21,156.25 25551 - 27375 26 45,000 11,70,000 14 60,000 8,40,000 5 84,000 4,20,000 24,30,000 10,00,000 34,30,000 160 21,437.50 27376 - 29200 29 45,000 13,05,000 16 60,000 9,60,000 6 84,000 5,04,000 27,69,000 10,00,000 37,69,000 160 23,556.25 Average Revenue per patient day 400 Average Variable cost per patient day 240 Contribution per patient day 160 Between 17000 to 23725 Patient Days is breakeven point
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